Amazon to enter Dow Jones Industrial average, replacing Walgreens

In new development for the US stock market, Amazon is poised to join the prestigious Dow Jones Industrial Average, stepping into the shoes of Walgreens Boots Alliance, according to S&P Dow Jones Indices.

The announcement triggered a 1.3 per cent surge in Amazon's shares, while Walgreens witnessed a 3 per cent decline following the news.

With Amazon's entry, the Dow will see an increase in consumer retail exposure, aligning with Walmart's recent stock split decision, which prompted the change, as stated by S&P Dow Jones Indices.

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Quincy Krosby, chief global strategist at LPL Financial, highlighted Amazon's versatility, describing it as a "hybrid name" that epitomises the Dow's representation of commerce across the United States.

The inclusion of Amazon in the Dow, effective at the opening of trading next week, marks a historic moment for the index, which has been a cornerstone of the US stock market since its inception in 1896.

As a widely tracked benchmark by retail and institutional investors alike, the Dow's composition carries significant weight in assessing market trends.

While Amazon's addition is poised to reshape the Dow, Walmart will retain its position in the index despite an upcoming three-for-one stock split.

However, the stock split will diminish Walmart's weight in the index, which is determined based on the share prices of its components, rather than their overall market value.

In a parallel move, Uber Technologies is set to join the Dow Jones Transportation Average, replacing JetBlue Airways Corp, according to S&P Dow Jones Indices.

This change will offer the transportation index exposure to the burgeoning ride-hailing industry, reflecting the index's responsiveness to emerging sectors.

Amazon's planned debut on the Dow will be the first move since 2020, when Salesforce, Amgen, and Honeywell International took the place of Raytheon Technologies, Exxon Mobil, and Pfizer.

Meanwhile, Walgreens, which joined the Dow in 2018, is making way for Amazon after a three-year tenure, replacing General Electric.

(With inputs from Reuters)